CALGARY, Aug. 1 /CNW/ – AltaCanada reported today that its first half drilling program resulted in 15 (13.4 net) completed wells out of 19 (17.1 net) drilled, representing a 78% success rate. Reserves from these new wells, which are primarily proved producing, have added to the year-end proved and probable reserves of 16.5 BCF. A mid-year reserve assessment by AltaCanada’s independent evaluator, using current price assumptions and this new well data, is currently being commissioned and will be available this Quarter. This drilling success has also increased AltaCanada’s inventory of future drilling locations on its Montana core area encompassing approximately 225,000 net acres.

Wildmere Disposition
In Canada, the sale of our heavy oil production at Wildmere, Alberta, closed on July 27. $5.5 million was received from the sale of 91 barrels of oil per day (18 degrees API) and 54 Mcf/d of solution gas. Reserves sold were estimated to be 306 MBOE. This sale completes our transition to a pure gas producer and follows our strategy of selling into the strong demand for oilproduction.

Proceeds of $5.5 million greatly strengthens our balance sheet and provides funds for further expansion of our Montana shallow gas play. The production and cash flow from Wildmere can be replaced with a small portion of the proceeds received from future drilling success on our large inventory ofMontana drilling opportunities.

As a result of the new drilling, net of the sale of the heavy oil assets, our credit facility with TD Bank has been adjusted to $9.5 million from its previous level of $11.0 million secured in April, 2006.

Outlook
In Alberta, current operations include a re-entry to test for bypassed gas at Gunn and an 11-well farmout targeting natural gas on the corporation’s 51 sections at Viking Kinsella. AltaCanada has the right to pay its share of equipping and tie-in for immediate production additions on successfuldrilling.

In Montana, an active drilling program is scheduled to resume in September. A 33 mile 2-D seismic program was shot in July and is currently being interpreted. A portion of the Fall drilling plans include one test well at Fort Belknap and a 55 mile 2-D seismic program to determine the potential of 43,500 gross acres currently under lease on this extension of theprospective trend.

Second quarter production in Montana averaged 4.4 MMcf/d. This was down from our March 2006 average of 5.1 MMcf/d and reflected significant plant maintenance during May when only 3.7 MMcf/d moved through our three contracted facilities. June production was still restricted but was back to 4.8 MMcf/d and does not include approximately 1.0 MMcf/d which is presently shut in and awaiting a further upgrade of facilities by our industry partner, expected in October 2006. Present Alberta production is 1.4 MMcf/d with Montana volumes at4.6MMcf/d bringing total production to 6.0 MMcf/d.

In this period of low gas prices, the Corporation is differentiating itself as a junior natural gas producer that has been able to add significantly to its reserve base, add to its land base and strengthen its balance sheet without equity dilution. This internal generated funding allows us to further add to the reserve base by drilling up part of our Montana drilling inventory and begin testing the new exploration prospect at Fort Belknap all planned for the Fall of 2006.

THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE. BOEs MAY BE MISLEADING, PARTICULARLY IF USED IN ISOLATION. A BOE CONVERSION RATIO OF 6 MCF : 1 BBL IS BASED UPON AN ENERGY EQUIVALENCY CONVERSION METHOD PRIMARILY APPLICABLE AT THE BURNER TIP AND DOES NOTREPRESENT A VALUE EQUIVALENCY AT THE WELLHEAD.

For further information: Don Foulkes, President, Telephone: (403) 265-9091 (ext 248), Fax: (403) 256-9021, Email: info@altacanada com